A rental sign advertising a townhouse on northeast Capitol Hill is pictured in Washington D.C.
Tom Williams | CQ Roll Call, Inc. | Getty Images
Even as the pandemic subsides and Americans work and play again, they still want more space at home. But with the record prices for private homes, the demand for single-family homes is rising – and with it the rents.
Single-family home rents rose 5.3% year-over-year in April, up from a 2.4% year-over-year increase in April 2020, according to CoreLogic. That’s the biggest win in almost 15 years.
The rents for single-family houses (not terraced houses) rose by 7.9% compared to the previous year, as millennials in particular are looking for more space outside. Nearly half of Corelogic’s millennials surveyed and 64% of baby boomers said they “strongly prefer” to live in a single, single house.
“Single-family rental growth showed a strong rebound in April 2021, with all price ranges back above their pre-pandemic rental growth rate,” said Molly Boesel, Chief Economist at CoreLogic. “While rental growth slowed last April at the start of the pandemic, rental growth this April, even compared to 2019, was above pre-pandemic levels and showing no signs of decline.”
The rent increases are in all price classes, even in the lower price segment, and for the first time exceeded the rent increases before the pandemic. By category, the prizes are as follows:
· Cheaper (75% or less than regional median): 3.9% compared to 3.2% in April 2020
· Low-medium price (75% to 100% of the regional median): 4.8% compared to 2.5% in April 2020
· Higher-medium price (100% to 125% of the regional median): 5.1%, compared to 2.3% in April 2020
· Higher priced (125% or more than the regional median): 6.1% compared to 2.2% in April 2020
Regionally after the 20 most important metropolitan markets, rent increases were highest in Phoenix, where single-family home rents were 12.2% higher than a year ago. Next up, Tucson, Arizona, up 10.6%. Las Vegas followed with 9.3%. Atlanta, with the lowest unemployment rate of up to 20 metros, came fourth at 9.1%.
Boston, on the flip side, saw rental rates decline 5.9% annually, and posted the largest rental rate decline in the 20-metropolitan market for nine months in a row. Chicago was the only other decline at 2.6%.
As real estate prices continue to rise in double digits and more potential buyers are being priced, the demand for single-family homes is unlikely to cool down in the foreseeable future.
“The current inflation is holding back the most interest-sensitive part of the economy, namely housing construction,” said Peter Boockvar, chief investment officer of the Bleakley Advisory Group.